The modern lithium ion industry originated in Japan in 1985, when Japanese chemistDr Akira Yoshinoand the team at Asahei Kasei made a prototype lithium cobalt oxide battery (LCO) based on prior work byM. Stanley Whittingham, John Goodenoughand Koichi Mizushima.

In 1991, Sony created the first commercial lithium ion cell. Three years later, Panasonic began producing the model at scale. From there, the battery quickly took hold of the portable devices market, enabling camcorders, laptops and cell phones to become fully portable.

Over the nineties and 2000s, Japanese firms gradually widened lithium ion’s applications into power tools, energy storage, and automotives, slowly displacing legacy batteries like nickel metal hydride, nickel-cadmium, and lead acid.

High demand for portable electronics spurred Japanese manufacturers to explore new chemistries. In 2005, Sony brought out the “Nexelion battery” for camcorders and laptops which added tin, cobalt, and carbon to the graphite of conventional LCO anodes, upping the volumetric energy density of the cell by 20%.

Moli Energy, a lithium ion manufacturer acquired by Japanese companies in 1994, first commercialised lithium manganese oxide (LMO) battery in 1996. LMO was a cost-effective alternative to LCO and also a much safer device, something at the forefront of Moli’s strategy at the time. The company had originally been bought up after one of its cell phone batteries caught fire, resulting in steep losses.

Lithium ion hits the road

Compared to portable devices, automotives were a harder application for the lithium ion industry to crack. Part of the reason were safety concerns about existing battery models, which were too explosion-prone to be accepted by the car industry.

The bigger constraint, however, was that hybrid cars were still experimental novelties at the time. Toyota and Nissan exhibited tentative prototypes at the Tokyo Motor Show over the early nineties but commercial models were still a work in progress.

All this meant the battery and automotive industries ran along separate tracks for much of the decade. However, the first step towards mass-market hybrids began in 1994 at Toyota.

Then the world’s largest auto company, Toyota began an R&D programme to improve fuel efficiency. It started off by looking at engine improvements but soon switched to developing a hybrid fuel and battery system for its cars.

In 1997, Toyota unveiled its new hybrid system and installed it into its Prius, which became the world’s first mass-produced hybrid EV.

Toyota’s marketing catchphrase for the Prius was “just in time for the 21st century”.

Yet the range limits of existing battery technology meant pure EVs were still a distant prospect and demand for hybrids remained low into the early 2000s.

For the automotive industry to go fully electric, new kinds of batteries were needed. They had to be cheap to produce while offering higher power density and a better safety profile than LCO or LMO.

At this time, it was not clear that lithium ion technology was up to the task. The car industry was still weighing up the older nickel hydride batteries, an older and heavier cell type that Toyota used in its Prius, as the go-to hybrid option.

Japan's history at the heart of the lithium ion battery industry

High nickel paves way for pure EVs

From 1997, new chemistries began to tip the scales in favour of lithium ion as the battery of choice for the automotive sector. In that year, Japanese researchers obtained a patent for a lithiated nickel dioxide cathode, which improved on the standard lithium cobalt oxide mix.

The 2000s came as a turning point for the EV industry thanks to a burst of R&D into nickel-manganese-cobalt oxide (NCM) cathode materials. The new chemistry meant a cell that stored a lot of energy in a small mass, offering long runtimes between charges. Finally, a lithium ion battery suitable for automotive applications had arrived.

Japanese producers began makingNCM cells, with the power tool market providing an important early source of demand. By 2006, sales of lithium ion batteries surpassed nickel metal hydride batteries in power tools for the first time.

In 2010, Nissan launched the Leaf, a pure EV that used a battery from AESC, a joint venture between Nissan and the Japanese electronics multinational NEC Corp. By 2017, the model was using NCM cells.

Panasonic goes West

The Nissan Leaf was the first pure EV model from a major car manufacturer but Tesla’s 2008 Roadster had been the first commercial car to run fully on battery.

Over the 2010s,Tesla presented Japanese car and cell makerswith an opportunity to tap foreign markets. Panasonic was the first to reach out to the US EV specialist, finalising their first supply agreement in 2010.

Thanks to the partnership,Tesla was able to switch from lower energy density batteries to Panasonic’s nickel-based chemistry, which had a higher energy density and a longer life.

In 2011, Panasonic invested $30 million into Tesla and acquired a 2% stake in the company.

In 2014, the companies built on their existing partnership to develop the world’s first gigawatt hour scale project aimed at producing what was then equivalent to the world’s supply under one roof. The Tesla-Panasonic gigafactory then began production in 2017 with an initial 35 GWh capacity.

Japanese OEMs continue overseas expansion

The early 2020s saw Japanese firms diversify into foreign markets while focusing on reducing production costs.

One example of this was Prime Planet Energy & Solutions (PPES), a2020 joint venture between Toyota and Panasonicto scale lithium ion production. By 2022, half its output supplied Toyota’s hybrids and plug-in hybrids with the remainder going into Tesla EVs.

In May 2021, PPES announced it would expand production at its facilities in Himeji, Japan and in Dalian, China. The same year, Toyota laid out plans for a new $1.2 billion gigafactory in North Carolina.

Panasonic is nowexpanding its gigafactory presence in the US. In November 2022 it broke ground on a new Kansas facility, due to begin production in 2025.

Another Panasonic gigafactory in Oklahoma is also on the cards, with the cellmaker announcing in April 2023 that it had entered an agreement with state authorities there over an incentive package designed to attract investment from major companies.

Alongside scaling of existing technologies, the Japanese cell and EV industry may now be entering a new phase of battery innovation. In 2023, Toyota announced a breakthrough on solid state batteries, which have higher energy density and a better safety profile than standard lithium ion batteries. It aims to commercialise by 2027.

Idemitsu Kosan and Belgium’s Umicore are also co-developing solid state batteries while Nissan is aiming to produce their own solid electrolyte cells by the end of the decade.

Benchmark is hosting itsBattery Gigafactories Asia Pacificevent in Tokyo, Japan, on 20-21 September.

Learn more about the event or secure your tickethere.